There's definitely a tasteful way to do this model. Dota 2, Fortnite, and Brawlhalla are examples of good ways to do this. To me, it comes down to two things:

1. Should not be able to purchase a competitive advantage

2. Should be able to purchase the item you want.

Re the second point, if you want the rare items and that involves gambling random item opaque loot boxes, that's an abusive relationship. If it involves purchasing the item directly, or buying a box where you can see all the items inside of it, that's a respectful relationship. Purchasing the item directly is the most preferred.

Games that do this entire model badly involve Hearthstone and any number of mobile games made by Supercell.

Some people might balk at the idea of purchasing any further items, but personally, I don't see anything particularly wrong with allowing cosmetics to be purchased and applied as a model that enables people to have a great free experience.